The hot summer months have come and gone in the Texas Hill Country. Well, almost at least. While Central Texans were busy going on family vacations and soaking up the sun, a lot was happening back at Pedernales Electric Cooperative. I want to make sure you aware of some of our recent PEC progress, and I plan to write several posts in future weeks to cover key topics in depth. For the purposes of today’s post, however, I’ll give a highlight reel of the past few months and preview some exciting new improvements coming this Fall.
As I wrote in my last post back in the early summer, we held our annual Board Elections and hosted our PEC Annual meeting in June. At that meeting, we welcomed two new Directors to our Board – Paul Graf, Dist. 6 and Amy Akers, Dist. 7. Director Graf has decades of electric utility experience, and Director Akers is an attorney as well as a Director on the Edwards Aquifer Board. They both are poised to offer great depth and valuable input to the PEC Board. Incumbent Director Cristi Clement, Dist. 1, secured her third term as well. With this most recent election, PEC now has a Board with a lot of relatively new faces. Four of the seven Directors have yet to serve out a full three year term. For many years we have heard a lot about the “reform” Board that came into being following the ousting of disgraced (and now jailed) former GM Bennie Fuelberg. With all of these new faces, we now see a move away from a reform mentality and towards one of refinement and innovation. I’m excited to see where the next few years will take us.
So where, now, is the PEC headed? First and foremost, the current Board seems collectively focused on lowering rates for members. Whereas the past seven years have been about putting into place basic corporate functions, such as audits and a working budget, the Board’s new focus is streamlining operations and reworking power supply options to lower member electric bills. On one hand, PEC is pursuing rate reduction through internal improvements and operational tightening. Three examples of internal cost cutting come quickly to mind. For starters, in the last two years, PEC has reduced its controllable costs and improved its employee headcount. We are currently operating with 714 well-trained, highly-utilized employees, whereas at our heftiest a few years ago, PEC employed upwards of 900 employees. Secondly, major cost reduction will be achieved in the next year following our new NISC software system launch in October. Our current SAP software system has been a nightmare to operate, update, and maintain the past few years, and shedding its largesse and associated inefficiencies will immediately benefit our bottom line. Once NISC is running on all cylinders, its Co-op specific processes will yield even further operational reductions. A third substantial internal cost-saving measure will be the closure of certain payment centers that have outlived their efficient usefulness. For years, PEC has been criticized for its overbuilt brick-and-mortar presence, and its time for us to become physically leaner, starting with some of these under-utilized payment centers.
In addition to our own operational cost reductions, PEC has sought rate relief through its major power supplier, the Lower Colorado River Authority (LCRA). LCRA GM Phil Wilson has been trimming fat from his organization since his arrival in 2014, and we have begun to see LCRA pass ensuing rate relief onto PEC and its other power supply customers. Concurrently, fuel costs have noticeably come down since last fall, and that has been an added benefit to PEC. In December, PEC will likely see its fourth rate reduction in 12 months, in this instance due to lower power bills from LCRA. In 2016, PEC members could see another rate reduction resulting from operational improvements within PEC. Five rate reductions in under two years should signal to our members our commitment to getting rates as low as possible.
In addition to lowering rates, the current PEC Board has been focusing on increasing service choices for our members. For example, the new NISC software system will create a user-friendly platform that includes tailored options for users. SmartHub, the program that will host member accounts, will contain all member information and will provide a host of options. Members can set billing dates, track usage, report outages, and opt-in to paperless billing, which may yield a bill decrease pending Board approval in the coming months. Outside of our software, future conveniences will also include increased payment locations – we are currently looking at opportunities for PEC bill payments at kiosks and local grocery stores, where currently our members can pay other utility bills.
Other member options may include choices in the actual rate structure used to calculate monthly bills. Currently, one formula is used to calculate a member’s rate [(amount of Energy used x Price of each energy unit ($/kWh)]. In September PEC will wrap a Cost of Service Study (COSS), which could result in Board adoption of Time of Use rates. These rate types allow members to select a rate that charges different values for energy used at various times of day. For example, if electricity prices are highest between 2pm-7pm in the summer months, on a Time of Use rate a family could make choices to run the dishwasher and dryer in the early morning and later evening to avoid higher midday prices. In this scenario, a member might spend less per month on electricity than they would using their current flat rate. The COSS will also assess our tariffs and service fees to see if other bill relief opportunities exist.
Another program coming in the near future to PEC members is a smart, on-bill solar financing program. I am personally not in favor of solar-rebates for members because they would be subsidized by other members, but this program makes residential solar installations more accessible without subsidy. Through PEC access to lower-than-market interest rates offered by Co-op lenders, members can secure loans for residential solar systems and pay for them in monthly installments tacked on to their monthly bills. Non-participating members will not be subsidizing this program because any administrative costs or potential risk from loan default will be allocated into the interest rates in the financing. This program expands options for those members that have their own solar energy plans and are looking for ways to make them into a reality.
Finally, the Board just voted almost unanimously to institute an Opt-In Operation Round Up program to collect member donations for charitable giving in PEC communities. Now, after years of requests for this program, members can choose to participate in PEC charitable giving practices as opposed to the previous practice of the Board making these decisions unilaterally. Charitable giving is on its way to being a generous choice, not a hidden mandate.
With all these changes, what is remaining the same at PEC? For starters, we still have top notch reliability. During a summer when ERCOT hit its all-time peak load, PEC still operated with no major system breakdowns or longterm outages. We have a solid system operated by our highly-capable, extremely professional linemen and field staff, and that means the commitment to being “always on” at PEC remains at the very top of our priority list. Our members also remain very satisfied with their cooperative, and our JD Power Customer Satisfaction Score went up to 692 from 674 in 2015. The PEC Board and your PEC management will continue to perpetuate the tenured spirit of our Cooperative, which has always been carried on by the commitment and hardiness of our employees and our members.
I hope this provided you a glimpse into all the continued improvements happening at your Cooperative. I will write in further detail in the coming weeks on the topics of our new software system, COSS, updated policies, and more rolling forward. Stay tuned, and happy Labor Day Weekend!